Poland: June 2000

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Economic reforms lead to robust performance of Polish economy  

The report states that accession to the EU remains in the forefront of Poland's economic and political goals and that much of the ongoing reform process is being driven by this objective. The report notes however that vigorous pursuit of multilateral trade liberalization would benefit Poland's long-term economic interest.

The new WTO Secretariat report, along with a policy statement by the Polish government, will serve as a basis for the trade policy review of Poland which will take place on 3 and 5 July in the WTO Trade Policy Review Body.

While Poland maintains a multi-stranded approach combining multilateral, regional and bilateral initiatives, trade liberalization in Poland has recently been largely concentrated at the regional level, the report says. The European Union (EU) - replacing the former COMECON area as Poland's main trading partner - accounts for around two-thirds of total merchandise exports and imports. Preferential access for EU products is provided under the Europe Agreement, whereby tariffs were eliminated on all industrial goods from 1999, except steel and petroleum products, abolished from 2000, and automobiles, which will be removed from 2002. Special arrangements apply to agricultural products.

The report notes that the impact on net trade creation of Poland's possible EU accession is not completely clear. While Polish most-favoured-nation (MFN) tariffs would fall on average by almost two-thirds (based on 1999 levels) following adoption of the EU's Common External Tariff, agricultural assistance is likely to increase significantly.

Poland also has free-trade agreements with the European Free Trade Association (EFTA), other Central European Free Trade Agreement (CEFTA) parties as well as bilaterally with the Baltic States, Turkey and Israel. Preferential tariffs differ substantially between trading partners, and in 1999 were, on average, less than half of Poland's MFN tariffs.

External trade is vital to the transformation of the Polish economy, the report says. Increased access to competitive imports following trade liberalization has facilitated Poland's export-led growth. The share of merchandise trade (exports and imports) to GDP increased from 38% in 1994 to 49% in 1997, before falling to 44% in 1999. Manufactured products account for over three quarters of Polish trade and export shares of these goods increased from 59% in 1992 to 77% in 1998.

The report notes however that import growth exceeded export growth throughout the 1990s, and that exports, hit hard by developments in Russia, contracted by 11% in 1999. As a result, Poland's trade and current account deficits widened considerably, approaching 9% of GDP in 1999.

Poland's MFN tariffs averaged 15.9% (unweighted) in 1999, compared with 6% on imports from the EU and other preferential sources. Much higher tariffs, averaging 34.6%, apply to imports from non-WTO countries. The report notes that substantial tariff dispersion exists: MFN rates range from zero to 293%. The report also notes that high tariff escalation exists on food, beverages and tobacco, textile and leather, and wood and wood products. The report states that the existence of many different MFN rates, often involving gradation at the one-decimal-point level, as well as numerous preferential rates, complicated and reduces the transparency of the tariff structure.

The report says that agricultural assistance continues to be a high priority in Poland. Agricultural support almost doubled from 12% in 1991-93 to 23% in 1997-99. This, the report notes, has assisted farmers, mainly at the expense of consumers, and has probably affected economic efficiency. Food prices, on average, were 27% above world levels in 1999. Farm assistance is delivered by tariffs, price support, supply control measures, credit and input subsidies as well as direct outlays, including export subsidies and deficiency payments recently introduced on wheat. The main products assisted include cereals, especially wheat and rye, pigmeat, eggs, sugar, poultry and oilseeds. Tariff quotas introduced by Poland under tariffication have been consistently under-utilized.

Industry restructuring in Poland is continuing, facilitated by reduced manufacturing assistance and trade liberalization, especially allowing competition from EU exporters. The report notes that impressive progress has been achieved in privatization of state-owned enterprises and in attracting foreign investment. Nevertheless, state-owned enterprises remain significant in some key sectors, such as hard-coal mining, steel, chemicals, shipbuilding, electricity generation, sugar, liquor, railway transport, and defence industries. Since 1998, the government has accelerated privatization efforts and aims at divesting 70% of remaining States assets by 2001.

In the services sector, the report notes that Poland is taking substantive privatization and de-regulation steps. The de facto state monopoly on long-distance and local telephone calls was terminated from 1999 and the statutory monopoly on international calls and mobile satellite services is to end from 2003. The digital phone market is already open. In the financial sector, bank privatization has accelerated since 1997, aided by substantial foreign participation. Entry restrictions on foreign banks and insurance companies, including operation of branches, have been removed, subject to enhanced prudential requirements.

Poland was committed to introduce the provisions of the Trade-Related Intellectual Property Rights (TRIPS) Agreement by 2000, and under the Europe Agreement, to providing intellectual protection and enforcement similar to the EU. The report notes that according to the authorities, Poland has had patent, trademark and copyright legislation broadly consistent with international standards for some time, and has strengthened such protection by introducing new legislation, such as on copyright in 1999. The report notes however that more effective enforcement of intellectual property rights remains a major challenge. The incidence of imported pirated and counterfeit products in Poland appears to be substantial.

Notes to Editors

Trade Policy Reviews are an exercise, mandated in the WTO agreements, in which member countries’ trade and related policies are examined and evaluated at regular intervals. Significant developments which may have an impact on the global trading system are also monitored. For each review, two documents are prepared: a policy statement by the government of the member under review, and a detailed report written independently by the WTO Secretariat. These two documents are then discussed by the WTO’s full membership in the Trade Policy Review Body (TPRB). These documents and the proceedings of the TPRB’s meetings are published shortly afterwards. Since 1995, when the WTO came into force, services and trade-related aspects of intellectual property rights have also been covered.

For this review, the WTO’s Secretariat report, together with the policy statement prepared by Poland, will be discussed by the Trade Policy Review Body on 3 and 5 July 2000. The Secretariat report covers the development of all aspects of Poland's trade policies, including domestic laws and regulations, the institutional framework, trade policies by measure and by sector.

Attached to this press release is a summary of the observations in the Secretariat report and parts of the government's policy statement. The Secretariat report and the government’s policy statement are available for the press in the newsroom of the WTO internet site (www.wto.org). These two documents and the minutes of the TPRB’s discussion and the Chairman’s summing up, will be published in hardback in due course and will be available from the Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.

Since December 1989, the following reports have been completed: Argentina (1992 and 1999), Australia (1989, 1994 and 1998), Austria (1992), Bangladesh (1992 and 2000), Benin (1997), Bolivia (1993 and 1999), Botswana (1998), Brazil (1992 and 1996), Burkina Faso (1998), Cameroon (1995), Canada (1990, 1992, 1994, 1996 and 1998), Chile (1991 and 1997), Colombia (1990 and 1996), Costa Rica (1995), Côte d’Ivoire (1995), Cyprus (1997), the Czech Republic (1996), the Dominican Republic (1996), Egypt (1992 and 1999), El Salvador (1996), the European Communities (1991, 1993, 1995 and 1997), Fiji (1997), Finland (1992), Ghana (1992), Guinea (1999), Hong Kong (1990, 1994 and 1998), Hungary (1991 and 1998), Iceland (1994 and 2000), India (1993 and 1998), Indonesia (1991, 1994 and 1998), Israel (1994 and 1999), Jamaica (1998), Japan (1990, 1992, 1995 and 1998), Kenya (1993 and 2000), Korea, Rep. of (1992 and 1996), Lesotho (1998), Macau (1994), Malaysia (1993 and 1997), Mali (1998), Mauritius (1995), Mexico (1993 and 1997), Morocco (1989 and 1996), New Zealand (1990 and 1996), Namibia (1998), Nicaragua (1999), Nigeria (1991 and 1998), Norway (1991, 1996 and 2000), Pakistan (1995), Papua New Guinea (1999), Paraguay (1997), Peru (1994 and 2000), the Philippines (1993), Poland (1993), Romania (1992 and 1999), Senegal (1994), Singapore (1992, 1996 and 2000), Slovak Republic (1995), the Solomon Islands (1998), South Africa (1993 and 1998), Sri Lanka(1995), Swaziland (1998), Sweden (1990 and 1994), Switzerland (1991 and 1996), Tanzania (2000), Thailand (1991, 1995 and 1999), Togo (1999), Trinidad and Tobago (1998), Tunisia (1994), Turkey (1994 and 1998), the United States (1989, 1992, 1994, 1996 and 1999), Uganda (1995), Uruguay (1992 and 1998), Venezuela (1996), Zambia (1996) and Zimbabwe (1994).

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The Secretariat’s report: summary

TRADE POLICY REVIEW BODY: POLAND
Report by the Secretariat – Summary Observations

The Republic of Poland continues to successfully pursue its rapid transformation to a market economy. Led by major trade and other comprehensive economic reforms, and based on strong private sector development, the Polish economy has performed robustly. Impressive growth rates since the early 1990s have raised real GDP to one quarter above pre-transition levels. GDP per capita averaged US$4,000 in 1999. Social indicators have also improved substantially. Nevertheless, rural poverty and regional development remain key problems.

Restoration of macroeconomic balances and radical restructuring of the economy have greatly contributed to Poland’s economic prosperity. The private sector now accounts for some three quarters of output. Foreign investment has accelerated and added to growth.

Recent Economic Performance and Outlook

The Polish economy has shown resilience to external factors. Despite an initial deep recession, the economy rebounded quickly with faster growth from 1992. Pre-transition real GDP was achieved by 1995, and subsequently growth has averaged around 5% a year. Slower growth of 4% in 1998-99, due mainly to the Russian financial crisis and the slowdown of the German economy, appears temporary, with prospects again promising following successful stabilization policies to control the contagion effects of these external developments. Growth is expected to accelerate in 2000 and 2001 to around 5% and 6%, respectively, based on resumed double-digit export growth.

Prudent stabilization polices have been an important part of Poland’s success. However, the fiscal deficit, which had fallen to 1.3% of GDP in 1997, recently rose to 3-4% of GDP. The budget deficit is projected to again fall in 2000, to about 2% of GDP. Inflation, although remaining relatively high, fell to 7% in 1999, but may rise in the short term, partly due to excise and VAT increases. High interest rates were reduced from 24% in early 1998 to 13% in early 1999 as the economy slowed. They were again raised in September 1999 in response to a quickening of the economy and rising inflationary pressures.

The exchange rate was partially liberalized in 1991 when the fixed rate was replaced with a crawling-peg system, pegging the rate to an Euro/U.S. dollar currency basket. From March 1999, the monthly rate of crawl was slowed to 0.3% and the margins widened to ± 15%. Significant capital inflows – encouraged by high domestic interest rates – and relatively high Polish inflation rates led, until late 1999, to a substantial real appreciation of the zloty, weakening external competitiveness.

Poland's trade and current account deficits have widened considerably, approaching 9% of GDP in 1999. Import growth exceeded export growth during the 1990s, and exports, hit hard by developments in Russia, contracted by 11% in 1999. Such deficits reflect imbalances between domestic savings and investment. Poland has a healthy capital account, buoyed by strong private investment inflows. These have effectively financed Poland’s current account deficits without raising public foreign indebtedness. External reserves provide import cover of six to eight months. External debt, assisted by international debt restructuring deals, fell from 37% of GDP in 1995 to 27% in 1999.

External trade is vital to the transformation of the Polish economy. Increased access to competitive imports following trade liberalization has facilitated export-led growth. The share of merchandise trade (exports and imports) to GDP increased from 38% in 1994 to 49% in 1997, before falling to 44% in 1999. The European Union (EU) has replaced the former COMECON area as Poland’s main trading partner, accounting for around two thirds of total merchandise exports and imports. Manufactured products account for over three quarters of Polish trade. Export shares of these goods increased from 59% in 1992 to 77% in 1998. Within manufacturing, the export share of iron and steel and chemicals has fallen, while that of machinery, transport equipment, and consumer goods has risen significantly.

Trade Policy Objectives

The main objective of Poland's trade policies is, overall, geared towards increased liberalization. Poland maintains a multi-stranded approach combining multilateral, regional and bilateral initiatives.

Poland is a founding member of the WTO and grants at least most-favoured-nation (MFN) treatment to all WTO Members. It is an observer to the plurilateral Agreement on Government Procurement. In the context of the Uruguay Round, Poland bound its agricultural tariff and almost all industrial tariffs; tariffs on products covered by the Information Technology Agreement (ITA) are to be phased to zero by 2002. Also, as part of its Uruguay Round commitments, all non-tariff measures, including variable levies, were converted into tariffs albeit at high rates, and minimum market access was provided by tariff quotas on agricultural products, including beef, pork, poultry meat, milk, and certain fruit and vegetables. Poland extended its initial GATS commitments on services through its participation in the WTO Agreements on basic telecommunication services and financial services, although it is still to ratify the Fifth Protocol.

Trade liberalization in Poland has recently been largely concentrated at the regional level. Preferential tariff cuts within regional trading arrangements have exceeded multilateral reductions. Preferential access for EU products is provided under the Europe Agreement, whereby tariffs were eliminated on all industrial goods from 1999, except steel, and petroleum products, abolished from 2000, and automobiles, which are to be removed from 2002. Special arrangements apply to agricultural products. Poland also has free-trade agreements with EFTA member States, other CEFTA parties as well as bilaterally with the Baltic States, Turkey, and Israel. Preferential tariffs differ substantially between trading partners, and in 1999 were, on average, less than half of Poland’s MFN tariffs.

Following OECD membership in 1996, and the commencement of EU accession talks in March 1998, Poland’s reforms are being driven largely by the objective of joining the EU by 2003. This goal is significantly influencing Poland’s economic and trade-related policies, which are now being harmonized with those of the EU. This requires comprehensive changes to institutional arrangements as well as enactment of new laws and regulations to achieve coherence with the EU’s acquis communautaire.

Poland is already well integrated within Europe, especially the EU, and this would clearly intensify following accession. EU talks are well advanced in many areas. Poland adopted a revised National Programme of Preparation for Membership in the EU in May 1999, and screening of its legislation for compatibility with EU law was completed by November 1999. Negotiations, however, are still pending in several important areas, such as agriculture, environment, and movement of people.

The impact on net trade creation of Poland’s possible EU accession is not completely clear. While Polish MFN tariffs would fall by almost two thirds (based on 1999 levels) following adoption of the EU’s Common External Tariff, agricultural assistance is likely to increase significantly. Further, the widening sectoral disparities in assistance between manufacturing and agriculture might hamper the efficient allocation of resources in Poland.

Further integration with the EU should accelerate Poland’s economic development and provide renewed opportunities and impetus for more comprehensive trade, investment, and other economic reforms. The extension of regional trade preferences on a non-discriminatory basis and securing them in the multilateral framework should maximize the benefits to Poland from trade liberalization.

Poland’s GSP scheme exempts many products, such as textiles, from preferential treatment. On average, preferential tariff margins on imports from developing and least-developed countries are limited; generally these countries receive less favourable access than Poland’s regional trading partners.

Trade and Related Policy Measures

Poland's MFN tariffs averaged 15.9% (unweighted) in 1999, compared with 6% on imports from the EU and other preferential sources; 14.1% on imports from developing countries; and 9.9% from least developed country suppliers. Much higher tariffs, averaging 34.6%, apply to imports from non-WTO countries. The tariff surcharge, introduced on all imports for balance-of-payments reasons in 1994, was progressively lowered from 6% to 3% and abolished as from 1997.

Substantial tariff dispersion exists. MFN rates range from zero to 293%, with a standard deviation of 24 percentage points. High tariff escalation exists on food, beverages and tobacco; textile and leather; and wood and wood products. Tariff transparency is improved by the high incidence (over 90%) of ad valorem tariff rates. However, the existence of many different MFN rates, often involving gradation at the one-decimal-point level, as well as numerous preferential rates, complicates and reduces the transparency of the tariff structure.

Almost 94% of Poland's tariff lines are bound. Poland adopted ceiling bindings for many products, exceeding, on average, MFN applied rates in 1999 by 25%, and by almost 66% on agricultural products. This gap provides scope to raise duties in the future, but affects the predictability of the tariff system. Poland recently used this leeway to substantially raise applied tariffs, to bound levels, on a range of agricultural products, such as wheat, butter, sugar, rapeseed, and pigmeat.

Customs clearance fees are generally ad valorem, not linked to the services provided. Some fees were eliminated in June 1999; the rest will be removed by 2001, except for those maintained by the EU. VAT and excise taxes levied on some imports appear to be discriminatory with lower rates levied on domestic products, such as clothing, where local products are exempt from excise duties while imports are taxed at 20%.

The new Customs Code of 1997 and the Customs Services (Administration) Act of 1999 provide an important framework for improving customs administration. However, customs clearances still frequently involve long delays and there are suggestions of inconsistent treatment. A computerized system is being introduced, and customs control is to be based on risk analysis.

Most import bans and quotas, such as on petroleum products, have been removed. Poland prohibits imports of used passenger and commercial vehicles older than ten and six years, respectively, for health and environmental reasons. These are to be eliminated by 2002. Import licensing also applies to petroleum oils and gases; certain vehicle engines and other components for assembly; some food products; gelatine for industrial use; alcoholic beverages; and tobacco products.

Tariff quotas apply to a wide range of imports. "First come, first served" global tariff quotas were implemented in July 1995 on many agricultural imports as part of tariffication. Many of these quotas have been consistently and substantially underutilized. Poland has also applied bilateral tariff quotas on agricultural imports from regional trading partners. Tariff quotas, including on a bilateral basis, also apply to certain manufactured goods.

Poland maintains mandatory health and safety standards – the B certificate – on many products to protect consumer interests. Many Polish standards are not related to international norms. Although the list of products covered by mandatory B certification was halved in 1997, the requirement still applies to about one third of all goods marketed in Poland.

Of 18,000 Polish standards in 1999, some 75% complied with EU norms; 15% with international norms not adopted by the EU; and 10% were Polish-designed. Poland aims to have at least 80% of standards harmonized with EU norms by 2002, and to adopt EU requirements where different from international norms.

Poland maintains strict quarantine and other SPS regulations affecting food imports, such as live animals and related products, vegetables, and fruit. Poland has signed several bilateral agreements concerning SPS matters since 1992. New regulations, including labelling requirements apply to imports of genetically modified food since November 1999.

Poland has taken import contingency measures, including anti-dumping duties, import quotas and licensing requirements, on a range of products, such as steel, footwear, and chemicals. Although Poland's use of general safeguard measures has been limited, it has frequently invoked specific safeguard action, mainly on agricultural imports, under its WTO and bilateral agreements.

Various adjustment and regional assistance schemes provide financial assistance, such as grants, loans, tax concessions, and loan guarantees, to promote industry restructuring. Such arrangements have been applied in iron and steel, chemicals, transport, machinery, food processing, energy, construction, and pharmaceuticals. National price preferences of 20% apply to government procurement contracts for goods and services, including construction. Domestic suppliers must source at least 50% of raw materials or construction costs locally.

Poland maintains, at least intermittently, export quotas and bans, on a number of products, such as animal skins and hides as well as non-ferrous scrap, aimed at protecting domestic supplies. These assist downstream processors, such as footwear manufacturers, by lowering input prices below world levels. Poland also monitors certain steel exports to the EU to counteract, according to authorities, the threat of anti-dumping proceedings. Several Polish exporters are also party to price and volume undertakings on exports to the EU.

Export subsidies apply, including on sugar, potato starch and, in 1999, on pig carcasses. Subsidies totalled US$13.9 million in 1998. Poland’s WTO agricultural commitments permit it to extend export subsidies to additional products, such as animal products, meat, fruit, vegetables, rapeseed, and rapeseed oil.

Export insurance and guarantees are provided by the government-owned Export Credit Insurance Corporation. Export promotion and finance, including loans and loan guarantees, are also available. Poland has 17 special economic zones and eight foreign trade zones that provide incentives. The new Customs Code provides for duty drawback or suspension on imported inputs processed for export. Exporters also benefit from investment-related tax rebates that preferentially tax export income.

EU norms have been used to model Poland’s competition policies. Existing legislation prohibits monopolistic practices, including abuse of dominant market position, defined as market share exceeding 40%. Mergers are prohibited if they create or strengthen a firm’s dominant market position. Poland’s competition law does not yet contain corresponding EU regulations on state aid, and comprehensive information is unavailable. New legislation aimed at full conformity with EU requirements on competition and consumer protection is due to be introduced in 2000.

Poland was committed to introduce the provisions of the TRIPS Agreement by 2000, and under the Europe Agreement, to providing intellectual protection and enforcement similar to the EU. According to the authorities, Poland has had patent, trade mark and copyright legislation broadly consistent with international standards for some time, and has strengthened such protection by introducing new legislation, such as on copyright in 1999. A new industrial property law is also envisaged.

More effective enforcement of intellectual property rights remains a major challenge. The incidence of imported pirated and counterfeit products in Poland appears to be substantial. Strengthened legislative provisions over customs seizure of such goods is being introduced. Since 1999, Polish customs have been able to seize suspected goods without first requiring an application from the right holder. Parallel imports are not permitted.

Sectoral Developments

Agricultural assistance continues to be a high policy priority in Poland. Agricultural support almost doubled (on a PSE basis) from 12% in 1991-93 to 23% in 1997-99. The PSE further increased in 1999 to 25%, compared to pre-transformation levels in 1986-88 of 29%. This has assisted farmers, mainly at the expense of consumers, and has probably affected economic efficiency. Food prices, on average, were 27% above world levels in 1999. Income transfers from Polish consumers in 1999 amounted to Zl 10.6 billion and from taxpayers Zl 3.9 billion. Total transfers to farmers represented 2.4% of GDP.

Farm assistance is delivered by tariffs, price support, supply control measures, credit and input subsidies as well as direct outlays, including export subsidies and deficiency payments recently introduced on wheat. The main products assisted include cereals, especially wheat and rye, pigmeat, eggs, sugar, poultry, and oilseeds. The Agricultural Market Agency intervenes to provide market price support to selected commodities.

Poland has sectoral policies for certain manufactured products, such as transport equipment. Relatively high tariff assistance, including duty-free importation of component kits, was used to encourage motor vehicle assembly, and licensing arrangements were introduced in 1996 to encourage vehicle production.

Industry restructuring in Poland is continuing, facilitated by reduced manufacturing assistance and trade liberalization, especially allowing competition from EU exporters. Remarkable progress has been achieved in privatization of state-owned enterprises and in attracting foreign investment. Nevertheless, state-owned enterprises remain significant in some key sectors, such as hard-coal mining, steel, chemicals, shipbuilding, electricity generation, sugar, liquor, railway transport, and defence industries. The Government has accelerated privatization efforts since 1998, aimed at divesting 70% of remaining State assets by 2001. Priority areas for privatization include financial and telecommunication services, and key utilities, such as electricity.

The efficient provision of business services, including finance and telecommunications, are essential for private sector development. Poland is taking substantive steps to privatize the provision of such services and to de-regulate such markets. The (de facto) state monopoly on long-distance and local telephone calls was terminated from 1999, and for domestic telex and telegraphic services from 2000. The statutory monopoly on international calls and mobile satellite services is to end from 2003. The digital phone market is already open. Privatization of the national state-owned carrier, TPSA, began in 1998, and is intended to increase. New legislation and a regulatory regime are being established to control anti-competitive practices and to ensure interconnection for new licensed entrants and the provision of universal service.

Bank privatization has accelerated since 1997, aided by substantial foreign participation. Entry restrictions on foreign banks and insurance companies, including operation of branches, have been removed, subject to enhanced prudential requirements. No limits exist on the number of foreign licences issued.

Trade Policy and Foreign Trading Partners

Poland is an active participant in the WTO, of which it is a founding Member. Poland extends at least MFN treatment to all Members and almost all of its tariff is bound. Trade policy is grounded in WTO commitments and trade liberalization, in support of ongoing economic reform, is an important objective.

Accession to the EU remains in the forefront of Poland's economic and political goals. Indeed, much of the ongoing reform process is being driven by this objective. Under EU accession, Poland's industrial tariffs would decline substantially but agricultural assistance is likely to increase, perhaps raising questions about net trade creation.

Poland has a large and expanding network of preferential trade agreements, with the average tariff under such agreements considerably less than Poland's average applied MFN rate. Concerns that partners might have about this disparity – and its possible effects on domestic resource allocation – could be allayed by a certain multilateralization of preferences.

Vigorous pursuit of multilateral trade liberalization would benefit Poland’s long-term economic interests. Poland’s trading partners could also facilitate its successful transition by ensuring non-discriminatory access to their markets.

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Government report  

TRADE POLICY REVIEW BODY: POLAND
Report by the Government - Part III

AI. Trade policy regime

1. Since the beginning of the 1990s Poland’s trade policy has been characterized by a broad process of regional and multilateral liberalization. In subsequent years Poland negotiated several free trade agreements with its trading partners and implemented the multilateral agreements of the Uruguay Round.

2. Foreign trade liberalization has become a key instrument for building a market economy system and integrating Poland’s economy into the world economy. A broad opening of Polish economy to the world economy has been an important component of the transformation package implemented since autumn 1989.

3. Import liberalization was considered as an important instrument to accelerate price reform, to encourage competition, reduce inflation and, by these means, to overcome the inefficiencies of central planning and ensure adequate market functioning. Increased competition resulting from import liberalization was also to speed up demonopolization, improve resource allocation, generate economies of scale, attract the FDI and thus to contribute to faster growth. It was also expected that import liberalization would stimulate the upgrading of the national economy technological level and, subsequently, enhance export potential.

4. The integration with the European Communities due to its economic, technological and political potential was to play the most important role. CEFTA agreement was motivated first of all by expected economic benefits related to trade liberalization and enhanced by close geographical position of the member countries. This Agreement was also necessary to avoid discrimination of mutual trade that would have resulted from bilateral free trade agreements of individual CEFTA countries with the EU. Other free trade agreements have constituted the elements of the adjustment process of Poland’s trade policy to the future adoption of EU common external relations.

5. Parallel to regional liberalization Poland actively participated in the Uruguay Round negotiations and submitted its own contributions. Since the entering into force of the WTO Poland has been vigorously implementing the Uruguay Round Agreements. The comprehensive rules on economic relations have created a benchmark for policy making in Poland, i.e. they have been playing the role of an external anchor for the systemic transformation in Poland.

(2) Regional agreements

6. The Europe Agreement on association with the European Communities was signed on 16 December 1991. It has provided for the gradual creation of free trade area in industrial trade, modest reduction of trade barriers in agricultural trade, progressive liberalization in trade in services and flow of capital, as well as the approximation of Polish laws to the EC acquis communautaire. Its commercial part entered into force on 1 March 1992 and other provisions on 1 February 1994. In 1993 free trade areas began to be created with CEFTA and EFTA countries on the basis of respective agreements.

7. In the next years new free trade agreements were negotiated with other partners (see Table 1). All of them are modeled after the trade part of the Europe Agreement and concentrate on the creation of free trade areas in industrial products and certain liberalization of agricultural trade.

8. By 1 January 1999, tariffs had been abolished on almost all industrial products imported from the EU (except mainly for cars; tariffs on these items are to be removed by 1 January 2002) and on the majority of industrial products coming from other countries - parties to free trade arrangements. Remaining tariffs will be eliminated under all free trade agreements by the beginning of 2002, at the latest.

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Table 1  

Free trade agreements negotiated by Poland with its trading partners in the 1990s

(1) Dziennik Ustaw – Official Gazette of the Republic of Poland. Back to text

(3) Implementation ot the WTO agreements relating to trade in goods

9. Poland became a founding member of the WTO on 1 July 1995, however the first tariff cuts on industrial imports from WTO members were introduced on 1 January 1995. Tariff commitments on industrial products included binding of 96% of tariff lines (main exceptions being motor vehicles, oil and linen products) and an average reduction of tariffs level by 38%. Agricultural products were subject to tariffication, tariff binding and then reduction of tariffs by 36% over six years.

10. Most tariff reductions on industrial products entered into force in 3-5 annual stages, the last cuts on most sensitive items (including textiles) will become effective in 2001. Tariffs on agricultural products were reduced in 6 equal installments by the beginning of 2000.

11. Poland also participated in the Information Technology Agreement of 1997. Under this Agreement additional tariff cuts were implemented on computers, semiconductors, telecommunication equipment, software, etc.

(4) Trade policy instruments Back to top

(i) Tariffs
12. After the suspension of most tariffs in the first half of 1990 – aimed mainly at combating extremely high inflation – Poland introduced new customs tariff in August 1991. The then introduced customs duties – mostly unchanged – became the basis for tariff reductions negotiated later with many trading partners.

13. As a result of regional and multilateral liberalization the level of tariffs has decreased substantially. The average weighted tariff on all industrial imports amounted to 2.2% in 1999. About two thirds of industrial imports (imports from the EU and other countries covered by free trade agreements) have been duty free since the beginning of 1999. Thus, the average tariffs on remaining imports (from countries subject to MFN duty and from developing countries subject to GSP scheme) amounted to 5.5% (Table 2).

14. Tariffs on agricultural products remain higher than on industrial goods. The weighted average duty (including suspensions) on agricultural imports from the EU reached 18.1% in 1999, 11.6% on imports from CEFTA countries and 12.7% on other agricultural imports.

15. Poland offers GSP preferences to 45 developing countries (DEVs) with a lower GDP per capita than itself and to 49 countries considered as least-developed countries (LDCs). Tariff rates on imports from DEVs amount to 80% of the MFN level. Imports from LDCs are duty free. However, certain products considered as sensitive ones are excluded from the concession schemes for DEVs and LDCs, including some agricultural and textile products, cosmetics, cars.

16. The level of tariff protection, apart from preferences offered to trade partners, is also affected by duty suspensions and tariff quotas within which a reduced or zero per cent customs rate applies. Suspensions have been applied occasionally on agricultural products in shortage on domestic market and on certain industrial components and supplies in order to reduce the costs of manufacturing, e.g. on raw materials and parts for textile, leather, petrochemical, electronic and paper industries. Tariff quotas result from Poland’s WTO commitments (on agricultural products) or free-trade agreements (e.g. on motor vehicles), or are introduced autonomously for economic and social reasons (e.g. on pharmaceutical products, bunker fuel, gluten-free foodstuffs for children). With the general reduction of the level of import tariffs the number of autonomous suspensions and tariff quotas has been decreasing.

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Table 2 

Average weighted import tariffs in Poland in 1999

(in %, according to the 1998 commodity pattern of imports)

Source: Calculations of the Ministry of Economy Back to top

17. In order to enjoy preferential access to the Polish market foreign exporter is required to present documents confirming the origin of the product from the country eligible for preferences. In the case of the European Union, EFTA, CEFTA, the Baltic countries and Turkey, the system of pan-European cumulation of rules of origin applies. The system facilitates the refund of customs duties on components originating in any of these countries and used in the production of export goods.

18. The currently negotiated Poland’s membership in the EU and the future adoption of the EU external tariff will affect significantly the level of import tariffs. Tariffs on industrial products will be reduced. Applied tariff protection of agricultural products will decrease or increase depending on the product. Polish import tariffs are lower than the EU external tariffs on cereals, milk products, bananas, some fruits etc. Higher tariffs are on products like tobacco, most alcoholic beverages, apples, certain types of potatoes, certain meat products, black tea, etc.

19. The adoption of the EU preferences system for DEV and LDC will extend substantially the number of countries eligible for tariff preferences.

(ii) Non-tariff measures
(a) Quantitative restrictions and administrative measures

20. Quantitative restrictions are applied in Poland to a very limited extent. The most restrictive measures – prohibitions – have been used for the protection of the health of consumers and animals (in imports of some food products imported from certain European countries), the protection of the environment (in imports of certain used vehicles and bodies and chassis for such vehicles, two-stroke engines and vehicles equipped with such engines) or the protection of genetic material (in exports of live geese and goose eggs). The prohibition applied to imports of used combine harvesters introduced in July 1994 was lifted on 1 January 1997. Ban on imports of spirits and unflavored vodkas introduced in 1991, by force of the WTO Agreement on Agriculture, was abolished on 1 July 1995.

21. In connection with accession to international conventions on substances damaging the ozone layer, Poland applies until the end of 2001 a temporary ban or automatic registration of turnover with abroad in these substances and in goods containing such substances.

22. Some restrictions in foreign trade result from political reasons, to mention the ban on the exports of land anti-infantry mines or particularly tight control of turnover in some goods and technologies.

23. The quotas introduced for the protection of the domestic industry have been systematically liberalized. Import quotas introduced on some goods in 1991 were gradually increased and then abolished: on alcohol and tobacco products on 1 July 1995 as a result of the tariffication of non-tariff barriers in trade of agricultural products, on petrol, fuel oil and heating oil at the beginning of 1997. In 1998-1999 Poland also removed quantitative restrictions in exports of raw skins and hides wastes and ferrous and non-ferrous scrap and waste introduced in 1993-1994 in order to secure the raw materials for the steel and leather industries.

24. Poland applied quotas on exports of textiles and clothing as a result of the agreements signed with the United States, Canada, the EC and Norway within the MFA. The restrictions on exports to the EU and Norway were abolished at the end of 1997. The quotas in Polish exports to the United States and Canada will be continued by the end of 2004. More favorable regulations concerning exports of textiles and clothing to the EU and Norway were possible thanks to the signing of free trade agreements. The limits in exports to Turkey introduced in January 1996 followed the entry into force of the customs union of this country with the EU and expired with the abolishment of quotas in exports to the EU.

25. Foreign trade in specific products still needs special licences but since 1992 the number of goods subject to this requirement has been steadily decreasing. At present licences are required for the following items: arms and ammunition for purposes other than military or police use, explosives and pyrotechnic materials (in imports and exports), alcoholic beverages, tobacco products, oil products as well as parts for industrial assembly of cars and tractors (in imports). The licences are issued by the Ministry of Economy to all operators that fulfill the criteria established in the relevant legislation.

26. Some goods require a permit for imports or exports. These are goods covered by quotas, automatic or non-automatic registration of turnover, goods which require a license to be object of foreign trade.

(b) Measures against unfair and excessive imports

27. With a decreasing border protection the Polish industry has been facing a growing foreign competition. At the same time Polish exporters have met market access barriers in many countries, mainly anti-dumping proceedings and duties. Such experience has resulted in a greater interest of Polish producers in searching similar remedies against foreign competition.

28. Respective measures are available under new laws on the protection of the Polish customs territory against excessive imports and imports at dumped prices which came in force at the beginning of 1998, in compliance with WTO principles and other international agreements signed by Poland. Relevant procedures are undertaken by the Minister of Economy upon a documented complaint submitted by domestic producers representing at least 25% of the domestic production of a given product. Thought the Minister can undertake a procedure ex officio, he hardly ever does it in practice.

29. The protective measures against dumped or excessive imports may be applied only when certain requirements are met i.e. the proving in a special investigation an injury and/or its threat to the domestic industry and its casual link with disputed imports. The safeguard measures should be treated as exceptional and be progressively liberalized. Decisions on the adoption of protective measures are taken by the Minister of Economy after consultation with the President of the Competition and Consumers Protection Office.

30. So far Poland has not conducted any anti-subsidy actions, as it has not adopted yet the anti-subsidy law in conformity with the WTO rules. The respective draft law has been worked out by the Government and passed to the Parliament. It should be enacted by the end of 2000.

(c) Anti-dumping measures

31. Since the last review Poland initiated four anti-dumping investigations. Three of them concerned non-WTO members (China and Belarus). In 1999, under the Law of 11 December 1997 on Protection against Dumped Imports into the Polish Customs Territory, an anti-dumping investigation was initiated against a German producer exporting X-ray films. It has not been completed yet.

(d) Safeguard measures (Article XIX GATT type)

32. Safeguard measures within the meaning of Article XIX GATT 1994 and the Agreement on Safeguards have been the most often applied commercial defense instrument in Poland, especially since the entrance into force in 1998 of the new law on protection against excessive imports. Under the previous safeguard provisions of the Customs Law of 1989 there were three safeguard actions taken in Poland. Two of them were conducted on a non-discriminatory basis (certain types of motor vehicles and used harvester-threshers) and one on a selective basis (urea and ammonium nitrate originating in six ex-Soviet republics). Most of 8 cases initiated under the new law were applied on a selective basis with reference to regional agreements or bilateral agreements with non-WTO countries. The only exception was a safeguard proceeding against excessive imports of coated steel sheets initiated on erga omnes basis in June 1999.

(iii) Other trade measures

(a) Special safeguard in imports of textiles and clothing

33. In 1999, under the Law of 11 December 1997 on Protection of Polish Customs Territory against Excessive Imports of Certain Textiles and Clothing, three safeguard investigations were initiated: against imports of textured yarn of polyester originating in Turkey, synthetic fibers from Republic of Korea and Taiwan, and certain acrylic yarn from Lithuania.

(b) Special safeguard in imports of agricultural products

34. Under the Law of 28 June 1995 on the Principles, Conditions, and Procedure of Imposing Additional Customs Duties on Certain Imported Agricultural Products, Poland may impose additional duties on imports of the majority of agricultural products covered by tariffication (ca 70% of all tariff lines for agricultural products). The Law which is modeled after the special safeguard clause of the WTO Agreement on Agriculture, became effective upon Poland's accession to the WTO. The duty may be imposed by the Minister of Economy on the motion of the Ministry of Agriculture and Rural Development provided a certain fixed threshold volume is exceeded or an import price is 10% lower than the threshold price. The volumes in question as well as a list of agricultural products, which may be subject to customs duties in a given year, are updated depending on the situation in the country and on foreign markets. In practice, the additional duties were introduced periodically on imports of cut flowers, pork, poultry, flavor, wheat grain, sugar, starch, hop cones.

(c) Protection against balance-of-payments disturbances

35. A temporary import surcharge of 6% was introduced in the end of 1992 in view of perceived threat of deterioration of the balance of payments situation. It was introduced consistently with the procedures established under Article XII of GATT by a Decree of the Minister of Finance and applied as an additional turnover tax until 4 July 1993. Thereafter it was transformed by a Decree of the Council of Ministers into a separate customs duty. Since 1 January 1994 the instrument was replaced by the import surcharge based on the Act adopted by Parliament, used as a separate border tax levied on all imports. The surcharge amounting to 6% in 1994 was gradually reduced (to 5% in 1995 and 3% in 1996) and eliminated by the beginning of 1997. The surcharge was applied to all sources of imports, including trading partners with whom Poland’s trade relations were based on GATT Article XXIV.

(5) Notifications under WTO agreements Back to top

(a) Agreement on Textiles and Clothing

36. Under the WTO Agreement on Textiles and Clothing, which became effective on 1 January 1995, Poland has submitted the list of products included in the first and second phases of integration into GATT 1994 comprising over 36% of the volume of imports in 1990.

(b) General Agreement on Trade in Services (GATS)

37. The Polish economy could be included into a group of the most dynamic developing economies in the world.dynamic developing economies in the world. Its feature is a permanently increasing role of services sector. This sector has become the most important activity for the Polish economy given its share in employment and its contribution to GDP. Changes emerging on the Polish market prove that Poland has been starting to become similar to the service economy's model that characterises developed countries.

38. The process of the liberalization of economy has been continued steadily. The existing measures which constitute either limitations to the market access or national treatment principle are subject to removal. An example is the elimination of restrictions regarding form of economic activity of foreign service suppliers. Foreign entities could now pursuit economic activity in a form of branches and representative offices. The remaining barriers to establishment will cease on 1 January 2001.

39. Poland declares the active participation in the round of multilateral services negotiations which has started 1 January 2000. Poland does not exclude from the scope of negotiations either modes of supply or services sector. Poland thinks the key element of negotiations will be a modification of the schedules of specific commitments and lists of MFN exemptions. This process will be based on a removal of existing restrictions for foreign services and service suppliers in the form of barriers to market access and national treatment limitations. Poland, in particular, takes part in the talks aiming at developing universal principles concerning qualification requirements, procedures, technical standards and licensing requirements which will be binding in the whole services sector. Poland participates in work concerning an implementation of relevant GATS rules that will govern the issues of government procurement and subsidies in the services sector. Poland is interested in development of emergency safeguards mechanism, too.

40. Poland undertook a number of commitments under the WTO General Agreement of Trade in Services (GATS). They covered 54 sectors and included among others: construction, telecommunications, business services, financial services, and tourism and transport services(2). In the majority of cases Poland’s commitments comprised binding of the existing level of access to the Polish market. It is worth stressing that the level of actual liberalization of access to services sector in Poland is higher than that negotiated with economic partners.

41. Poland took active part in the subsequent negotiations on selected services sectors. Under the Agreement on Basic Telecommunications signed in 1997 Poland undertook commitments covering such areas of services as: telephony, transmission of telex, telegraph and fax data, lease of lines, television and radio broadcasting, cellular telephony, satellite telecommunication. As regards access to the market of all telecommunication services, the commitments provide that a license or permit for making the services may be issued exclusively for agents registered in Poland.

42. No restrictions have been imposed on most telecommunication services provided on a cross-border basis (i.e. from outside Poland) or in the form of consumption of services by Polish entities abroad. Foreign entities having their seat in Poland are not allowed to provide international telephony, telex and telegraph services till the end of 2002. The liberalization of telex and telegraph services provided by foreign legal persons has been offered since 1 January 2000.

43. Under the Agreement on Financial Services (1995 and 1997)(3) , Poland has undertaken commitments on the following types of financial services: holding deposits, loans, services involved with payments and money orders, guarantees and banking securities (excluding guarantees and commitments by the State Treasury), intermediation in the issue of all kinds of securities (excluding those issued by the State Treasury), services provided by trust funds. In the case of most services Poland did not assume obligations in the field of market access for cross-border services (i.e. possibility of consuming services rendered abroad by citizens of a country; the availability of such services is linked to the possibilities of transferring foreign exchange assets abroad). As regards these services, Poland assumed very limited commitments in the mode of services provided on the Polish territory by foreign natural persons.

44. For the above kinds of services Poland has not assumed liberalization commitments either in the field of market access, or in national treatment as regards both cross-border services and access to services abroad. The only exception to this approach is the limited assumption of commitments in the scope of cross-border services and foreign consumption, for services in the field of providing and transferring financial information and processing of financial data. A reservation has been adopted for the last kind of services that their provision or utilization requires intermediation of the public network or another authorized operator.

45. The largest scope of commitments in access to the market of financial services refers to services provided by foreign legal persons having their commercial representations in Poland, on which some limitations have been imposed in connection with the binding national regulations and application of the so-called providence principle (e.g. a bank can be established exclusively in a form of a joint-stock company and upon obtaining a permit).

46. Similar limitations have been introduced in the case of services provided by foreign natural persons having their representations in Poland. However, this restriction is of no major practical relevance, and only of an indicative value in view of the fact that liberalization commitments have not been assumed as regards the market access for services provided by foreign natural persons in Poland.

47. On the other hand, the national treatment principle has been secured in reference to the third and fourth modes of providing financial services, which means that foreign entities will be allowed to provide financial services on the Polish market on an equal footing with Polish entities.

48. Apart from that, a reservation was made supplementing the opportunities for introduction of new regulations motivated by providence reasons, which may amend the binding regulations or introduce new regulations. Nevertheless, it has been assured that the application of these regulations will be fully consistent with the provisions of the Annex to GATS referring to financial services.

(c) Agreement on Subsidies and Countervailing Measures

49. In February 1996 Poland notified the application or the possibility of application of five types of export subsidies: income tax allowance on account of investment related to exports, income tax allowance up to the level of a half of receipts from exports for entities operating in special economic zones, programs of financial support for credit guarantees and program of support for export contracts insurance by the Export Credits Insurance Corporation (KUKE)(4).

50. In accordance with the provision of the Agreement concerning the transitional period, all these subsidies should be either abolished or adjusted to WTO rules by the end of 2001. The first type of the investment incentives was eliminated on 1 January 2000. Taxpayers who before 31 December 1999 obtained the right to apply such incentives may use them till the end of 2002. Income tax allowances for entities in special economic zones still apply but no new such zones will be created.

51. In March 1998 Poland submitted a notification in accordance with Article 25 of the Agreement on Subsidies(5). This document covered specific subsidies applied in the manufacturing sector in 1996 (12 types of subsidies) and agricultural subsidies applied in 1994-1996 (four types of subsidies). Moreover, the notification included four types of export subsidies notified earlier in accordance with Article 29 of the Agreement on Subsidies.

(d) Agreement on Trade-Related Investment Measures (TRIMs)

52. On 28 September 1995 Poland notified one investment measure inconsistent with the TRIMs Agreement, i.e. income tax rebate for purchase of cash equipment registering VAT. This measure resulted in a higher income tax rebate for the purchasers of domestic cash equipment as compared to the purchasers of that manufactured abroad (equipment is considered as domestically produced if imported components do not exceed 60% of the total cost of production)(6). As of 1 January 1997, the tax rebate has been uniformed with respect to all cash registers in accordance with the obligation of national treatment provided for in paragraph 4 of Article 3 of GATT 1994. Therefore Poland, pursuant to Article 5.2 of the Agreement on TRIMs, terminated measures notified under Article 5.1 of the Agreement on TRIMs(7).

(e) Agreement on Agriculture

53. In the field of agriculture export subsidies are applied only to sugar and occasionally to meat exported to the CIS. The value of those subsidies is much below the amount provided for in Poland’s Schedule under the WTO Agreement on Agriculture.

(f) Agreement on the Application of Sanitary and Phytosanitary Measures

54. Pursuant to this Agreement Poland has established the National Enquiry Point located at the Ministry of Agriculture and Rural Development, Department of Agriculture Production. Since the adoption of this Agreement Poland has submitted to the Committee on Sanitary and Phytosanitary Measures 22 notifications on sanitary measures and three notifications on phytosanitary measures. Few of them related to emergency measures undertaken in order to protect human, animal and plant life or health and most notifications provided for information on the rules and principles of import and export of certain animals and plants.

(g) Agreement on Trade-Related Intellectual Property Rights (TRIPS)

55. Polish Government is determined to ensure consequently the intellectual property protection. Polish legislation has provided for the growing level of the protection since 1994 when the new Law on Copyright and Related Rights was adopted.

56. Poland has submitted to the Council for TRIPS its intention to avail itself of the right, under Article 65.3 of the TRIPS Agreement, to delay the date of the application of the provisions of the Agreement other than Articles 3, 4 and 5. During the transitional period Polish legislation has been in full conformity with the binding provisions of the TRIPS Agreement (Articles 3, 4 and 5 of the TRIPS Agreement).

57. In 1998, Polish legislation on copyright and related rights as well as legislation on enforcement related to copyright and related rights were reviewed. Poland has subjected itself to the review though was availing itself of the transitional period under Article 63.3 of the TRIPS Agreement. The review has proved conformity of the Polish legislation in these areas with the TRIPS Agreement except for some provisions.

58. One of the examples of the conformity with the TRIPS Agreement is a Regulation on the procedure and operating principles for Customs Authorities for withholding goods in case of suspected violation of provisions of intellectual, commercial and industrial property, issued in February 1999 by the Council of Ministers in order to introduce amendments necessary to fulfil requirements of the Section 4 of the TRIPS Agreement.

59. The level of Polish protection of intellectual property rights will go beyond the requirements of the TRIPS Agreement due to Poland’s accession to the European Union. Back to top